Lord Fink says there was never any possibility of him profiting from sponsoring the private dinner EPA

The Conservative Party treasurer was facing a parliamentary standards investigation last night over his role in sponsoring a private dinner in the House of Lords for paying American Express cardholders.

The shadow Cabinet Office minister, Jon Trickett, said he had written to House of Lords Commissioner for Standards to ask him to examine why Lord Fink sponsored the money-making dinner as part of the $10,000 Wimbledon Championships package available to AmEx Platinum and Centurion card holders.

Lords sources suggested it was likely that the Commissioner, Paul Kernaghan, would investigate potential breaches of the code along with other allegations revealed in The Independent yesterday.

He will then report to the House of Lords Committee for Privileges and Conduct, which can censure members who are found to have broken the code.

Penalties can include a formal reprimand or, in the most extreme cases, suspension from the House of Lords until the following election.

Lord Fink admitted that he had offered to sponsor the American Express dinner which was part of a money-making package for the company. But there was never any possibility of him profiting, he said, and American Express planned to make a charitable donation.

Lords rules state that banqueting facilities "are not to be used for the purposes of direct or indirect financial or material gain by a sponsor ... or any other person or outside organisation".

However after being contacted by The Independent he decided to withdraw the invitation.

But Mr Trickett said the whole affair needed to be properly investigated. "We have written to the Commissioner to ask him to look in detail at what The Independent has found. These are serious issues that need to be examined."

The Liberal Democrat deputy leader, Simon Hughes, said: "These revelations shine a spotlight on the often murky world of business interests in the House of Lords.

"This is an institution that is long past its sell-by date. It is an affront to a modern democracy to have unelected peers file in to claim their tax-free £300 every day but be unaccountable to the people they govern.

"Lawmakers cannot be lobbyists too. The representatives of the people cannot live in the pockets of big business. How much more scandal do we need to see before we reform our outdated and unelected House of Lords?"